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United States securities and exchange commission logo
September 8, 2023
Scott R. Behrens
Chief Executive Officer
Stepan Company
1101 Skokie Blvd., Suite 500
Northbrook, Illinois 60062
Re: Stepan Company
Annual Report on
Form 10-K for the year ended December 31, 2022
Response Dated
August 25, 2023
File No. 001-04462
Dear Scott R. Behrens:
We have reviewed your August 25, 2023 response to our comment
letter have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
August 14, 2023 letter.
Response dated August 25, 2023
Management's Discussion and Analysis of Financial Condition and Results
of Operations, page
23
1. We note your response
to prior comment two. Please further address the following:
Your response
indicates that your manufacturing customers and end customers have
"varying degrees of
interest in and sensitivity to the raw material and emissions
profiles of
intermediate products" such as yours. Tell us more about what you have
experienced in this
regard, including the extent to which you have been or expect to
be affected by
emissions reduction targets of your primary customers. Explain how
you assessed the
related changes in demand and reputational risks, and provide
support for your
determination that these are not material.
Scott R. Behrens
FirstName LastNameScott R. Behrens
Stepan Company
Comapany 8,
September NameStepan
2023 Company
September
Page 2 8, 2023 Page 2
FirstName LastName
Your response further indicates you have "experienced increased
demand for
products that produce lower GHG emissions and/or utilize
alternative energy
sources." Tell us how you considered disclosing this trend and
how you determined
the impact is not material, providing support for this
determination. In this regard,
we note your risk factor disclosure regarding the need to develop
and introduce new
products.
Your response references "energy source considerations" and
"alternative energy
sources." Tell us more about the energy from alternative energy
sources used in your
operations, as well as your use of petroleum-based and
plant-based raw materials, and
more fully explain how these relate to the indirect consequences
you considered.
The risk factor cited in your response addresses environmental
regulations, but does
not appear to specifically address climate change. Accordingly,
tell us how you
considered the indirect consequences of climate-related
regulation on your operations
and business, including with regard to the individual items noted
in our comment.
2. We note your response to prior comment three. Please further address
the following:
Your response indicates that you are "not able to quantify the
impact of the foregoing
weather-related production disruptions due to additional
non-weather related factors
that contributed to the production disruptions." Describe these
non-weather
contributory factors and explain how they affect your ability to
provide the
quantification of weather-related damages to your property and
operations requested
by our comment. In this regard, we note disclosure in your Form
10-K regarding an
$18 million insurance settlement related to the 2020 Millsdale
production disruption.
Your response further indicates that you are unable to
determine whether there will
be an increase in weather-related production disruptions. Tell us
how you considered
disclosing the uncertainties and risks of climate-related
physical effects on your
business and operations, and those of your suppliers.
Your response that you have not experienced material
weather-related damages to
your property appears conclusory. Tell us about any such damages
and tell us how
you evaluated materiality, including by providing the
quantification requested by our
prior comment.
Your response does not address water availability or quality,
although your
Sustainability Report appears to highlight these issues and
related projects. Tell us
how you considered disclosure regarding water availability and
quality, including
your assessment of materiality on your business and operations.
Your response quantifies the increase in insurance premiums and
the costs of sales
Scott R. Behrens
Stepan Company
September 8, 2023
Page 3
and operating expenses. Additionally quantify the cost of
insurance premiums for the
periods covered by your Form 10-K.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Benjamin Richie at 202-551-7857 or Jennifer Angelini at
202-551-3047
with any other questions.
Sincerely,
FirstName LastNameScott R. Behrens
Division of
Corporation Finance
Comapany NameStepan Company
Office of
Industrial Applications and
September 8, 2023 Page 3 Services
FirstName LastName